The importance of a diversified portfolio

The tail end of 2016 and then the whole of 2017 saw an unprecedented level of catastrophic events all over the world. The mature (and well insured) US Insurance market was rocked by hurricanes and wildfires, whilst the rest of the world was no less impacted with several deadly cyclones and earthquakes.

Swiss Re, one of the world's largest reinsurance entities, shared their results in stark detail, allowing us to see that Property & Casualty Insurance and Reinsurance (which have seen consecutive years of profitability and growth) suffered from major losses, delivering combined ratios of 133.4% (Ins) and 111.5% (ReIns). One might expect this to mean that the group as a whole would run at a loss, but the continuing strong performance of their Life & Health Reinsurance division meant as a whole the group remained profitable (albeit at nowhere near previous levels). Hence my point about the importance of diversification...

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Swiss Re has posted a loss in property/casualty reinsurance and corporate solutions, with life & health helping to prevent a group loss in 2017.
The group net income plummeted to $331 million in 2017 compared to $3.56 billion in 2016, according to a Feb. 23 press release. Gross premiums written shrank to $34.78 billion from $35.62 billion over the period.
P&C Re posted a net loss of $413 million for 2017 after a net income of $2.10 billion in 2016.
Estimated combined claims of $3.7 billion from 2017’s large natural catastrophes led to the “strong decline” in P&C Re’s results. After Cyclone Debbie in March, hurricanes Harvey, Irma, and Maria and the Mexican earthquakes caused considerable damage during the third quarter of 2017. During the last quarter of the year, wildfires in California resulted in [an] additional ... $0.4 billion.